Wednesday, February 8, 2012

Microsoft promises that it 'will not seek an injunction' based on standard-essential patents

These days, the FOSS Patents blog has pretty much become the FRAND Patents blog because of all of the issue surrounding FRAND licensing obligations in connection with standard-essential patents. But all of this also has positive effects. The best news in my view is that the current situation makes leading industry players think and talk about how standard-essential patents should and should not be used. Most of them have previously commented on those questions in some other contexts, but typically just in connection with consultations by lawmakers and regulators. Now this discussion is taking place in public, and a wider audience than ever takes an interest in this important topic.

Earlier today I published Apple's recent letter to ETSI, the leading telecoms standards body, that complains about widespread abuse of standard-essential patents and proposes a framework that has three pillars: appropriate royalty rate; common royalty base; no injunction.

I just noticed that Microsoft has issued a public statement today on essentially the same questions surrounding standard-essential patents. It's concise and crystal clear. Microsoft has contributed patents to numerous industry standards and says how it intends to use those. The four points that Microsoft states can be paraphrased as follows:

Microsoft will always ask for truly FRAND terms as opposed to asking for the moon.

Microsoft won't ask courts or trade agencies to ban products based on standard-essential patents. There's absolutely no loophole there: Microsoft says that it "will not seek an injunction or exclusion order against any firm on the basis of those essential patents". This is exactly the kind of statement that would help defendants in court.

Microsoft won't use standard-essential patents as leverage in order to force others into a cross-license involving other patents, "except for any patents they have that are essential to the same industry standard". For example (this is my example, not theirs), it won't use patents on networking standards to force others to grant licenses to their standard-unrelated multitouch inventions.

Microsoft won't try to circumvent those obligations or commitments by selling any of its standard-essential patents to others who might claim they don't have to comply with them. If Microsoft sells any such patents, it will make sure that buyers will adhere to the same terms.

If Google made a statement as clear and helpful as the ones that Apple and Microsoft made, I wouldn't be concerned about the patents part of the Motorola deal.

Finally, a personal note. I announced a few months ago that I am working on a Microsoft-commissioned study on the worldwide use of FRAND-pledged standard-essential patents. That study will be the objective result of my research in this area. I would have been happy to provide the same research service to any industry player who is interested in knowing what's going on, but it obviously feels better to do this with support from a company that promotes and practices FRAND disarmament than to work with a FRAND abuser. Even the former anti-patent campaigner in me welcomes Microsoft's statement today. Of course, activists can and will always ask for more, but this is very important progress and I wouldn't want any major industry player to fall short of what Apple and Microsoft have said about injunctions and royalty demands in connection with standard-essential patents.

In particular, I think no one can seriously claim to be a big supporter of open source and then be less clear and constructive on FRAND than the largest commercial software company in the world.

Let's hope in the interest of consumers and industry alike that Google will join responsible patent holders like Apple, Cisco and Microsoft with a great FRAND declaration.

Meanwhile, Microsoft has published some further explanations of its stance on standard-essential patents on its corporate blog. Among other things, Microsoft explains that the FRAND system "works really well, almost all of the time" -- note the word "almost". There are exceptions, and "[t]hese outliers create a lot of trouble for the international standards ecosystem". That's a concern that many companies have had over time.

Microsoft has certainly not been the first company in the industry to make a clear "no injunction" statement on FRAND patents. Nor has Apple. Cisco, for example, said so before them. But based on what the industry at large is now experiencing with the aforementioned "outliers", the problem of companies demanding excessive royalties in order to have an excuse for injunctions is rather new. My own position has always been the one that Apple and Microsoft advocate now. Going forward, their most recent statements are the only ones that matter. The moment someone promises not to seek injunctions, there's certainty, and that certainty should now be provided by Google as well. Or am I asking too much? We shall see.

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About Me

Florian Mueller is an app developer who used to be an award-winning intellectual property activist. His 30 years of software industry expertise span different market segments (games, education, productivity and infrastructure software), diverse business models, and technical and commercial areas of responsibility. In recent years, Florian advised a diversity of clients on the patent wars surrounding mobile devices, and on their economic and technical implications. (In order to avoid conflicts of interest, Florian does not hold or initiate transactions in any technology stocks or derivatives thereof, except that he is long AAPL.) He is now developing games for smartphones and tablet computers.